Bankruptcy is a drastic situation where homeowners or car owners come directly under the scanners of their respective lenders. Chapter 7 Bankruptcy is among the most prominent chapters sitting under the BAPCPA, which is the new Bankruptcy Act, hence Chapter 7 was modified in the form that is available as Chapter 7 Means Test. The purpose of modification seems to be quite necessary as Chapter 7 bankruptcy was being abused by many in its previous form. The good thing to know here is that everyone who previously qualified for a Chapter 7 bankruptcy will easily be eligible for Chapter 7 means screening.
Qualification for the Means Test
If your “Current Monthly Income" is below the income level of your state"s household size, even then you will only qualify for Chapter 7 proof.
Here the term “Current Monthly Income" would mean the monthly average accumulated during the last six months. In case your average monthly income in the last six months is above average, then you have to deduct the allowable expenses using a complex calculation formula.
If at the end of the application of the formula you find money in what remains for overpayment to creditors even after deducting the allowable expenses, you fail the means test eligibility.
You can look up Chapter 7 bankruptcy information from the Federal Government website. Browsing the website will provide you with detailed information on the rules, terms, and conditions.
Be prepared to avail benefits under the test which is the result of BAPCPA-the new bankruptcy law. Chapter 7 means is the new and modified version of the bankruptcy law envisaged in the BAPCPA. The purpose is to prevent people from abusing the terms and conditions written under the bankruptcy law. With chapter 7 bankruptcy modified, it has become quite easy to file for bankruptcy and get the most out of the losses your business has incurred. Make sure you understand all the written protocols in order to achieve the benefits provided in this new bankruptcy law.
Make sure you study the Chapter 7 bankruptcy requirements in detail. For this purpose, you need to hire the services of the bankruptcy lawyer and discuss your eligibility requirements. You can also search for means calculator online for details.
Eligibility For A Chapter 7 Bankruptcy
If you are looking for an easy way to determine your eligibility under Chapter 7 means testing, use an online means test calculator. Once you enter your zip code, the calculator uses the applicable income and expense guidelines for your state, county, and region to determine your eligibility.
You will need to provide some income and expense information, but the calculator will save you the hassle of looking for spending and income figures for your area and doing the math. And, if you decide to file for bankruptcy Chapter 7, you can use these figures in official paperwork (the calculator closely follows the format of the means form, Official Form 22A, which must be done when you file for bankruptcy).
The “proof of means" of bankruptcy determines if your income is low enough for bankruptcy Chapter 7. The formula is designed to keep the highest income claimants filing for bankruptcy Chapter 7. High-income claimants who do not exceed Proof of means they can use Chapter 13 bankruptcy to pay off a portion of their debts, but they cannot use Chapter 7 bankruptcy to completely clear their debts.
However, having to do the Chapter 7 means test does not mean that you must be poor to be able to use Chapter 7 bankruptcy. You can get significant monthly income and still qualify for Chapter 7 bankruptcy if you have a lot of expenses, such as a payment for a mortgage loan.